Senator Ita Enang’s spirited claim
at the National Assembly Wednesday to the effect that 83% of the
country’s oil block is in the hands of northerners appears to be
inspired from assertions contained in an old article by a newspaper
commentator, Mr. Ross Alabo-George whose famous essay was titled Poverty And Deprivation: Why The North Is Poor.
In the excerpted refutation below, Toyin Akinosho, a petroleum
geologist with over two decades of work at Chevron and now publisher of
the well-regarded Africa Oil and Gas Report, argues angrily that such
lines of thought canvassed by the likes of Senator Ita Solomon
Enang and indeed Mr. Ross Alabo-George are merely hysterical, and
tendentious, designed to mislead the public. Mr. Akinosho characterizes
the arguments as crappy and crummy. It is excerpted from the African
Oil+Gas Report for the value it brings to the current debate about
Nigeria’s oil resources and the National Question.
Alabo-George’s article plays up so well the sentiments that a
good number of Nigerians, especially middle class types excluded from
the spoils of the petroleum subsidy, and allied deliverables, nurse
about the kind of leadership we have suffered since independence.
But it has gone around so far and keeps being forwarded so rampantly,
largely because it plays to the ethnic schism; the suspicions that each
of us harbours, in our different silos, about “the other”.
It’s largely a response to the disingenuous claim by Sanusi Lamido
Sanusi, the Central Bank Governor, that the Boko Haram insurgency is a
response to the 13% derivation allocated to the oil producing states
from the federation account. “There is clearly a direct link between the
very uneven nature of distribution of resources and the rising level of
violence”, Sanusi told The Financial Times of London.
Alabo-George’s piece is compelling when he contrasts what non
oil-producing Southern states have been able to do with their supposedly
meager allowances with what their Northern counterparts have done with
their own allocations.
“Ekiti State has about the same revenue as Yobe and Gombe”, he
contends, “but only 17 students passed WAEC and NECO in Gombe state last
year, while Ekiti State is known for its high literacy level”.
I find two beautiful quotable quotes in the article: (1) “Borno State
has a bigger budget than that of Cross River, a Niger Delta State.
While the leaders of Cross River over the last decade have transformed
it into the nation’s leading tourist destination, those of Borno have
transformed it into a Somalia”.
(2) “Gombe State has a bigger budget than Enugu and Anambra, why has MASSOB not bombed anyone”?
But once Alabo- George ventures beyond the political economic
analysis and starts to list who owns what oil and gas assets, his
article is a litany of inaccuracies and lies. He gets it totally wrong.
He writes about the estate of the late Mai Deribe, the Bornu State
born businessman, supposedly owning a huge oil field; Rilwanu Lukman
having controlling shares in Afren; Atiku Abubakar being the
stupendously rich beneficiary of the profits of Intels, the logistics
company; Aminu Dantata’s Express Petroleum. He ties Amni Petroleum to
only Sani Bello.
So much conspiracy theory.
Oil acreage ownership in Nigeria does not have ethnic colouration.
What’s more important, sustaining production from oil and gas assets,
whether or not awarded by the state, is determined by how much of a
businessman you are.
When Jibril Aminu handed out oil prospecting blocks, in the first
comprehensive effort “to encourage indigenous participation” in 1991, he
gave blocks to companies owned by Folawiyo, Abiola, Adenuga, Udoji,
Ibru, Igbinedion,(all Southerners) as much as he gave to enterprises set
up by people like Saleh Jumbo and Mai Deribe.
Between 1991 and 1993, we suddenly had over 25 companies, that were
Nigerian E&P companies and they took themselves so seriously that
they set up an association they christened “Nigerian Association of
Indigenous Petroleum Exploration Companies”. But what did these people
do with the acreages? They were mostly clueless about how to progress
things.
Out of that class of awardees, only Mike Adenuga created what you
could really call an E&P company. He is the only one producing oil
today, from his own block.
It’s bad enough that Nigerian indigenous private acreage holders
don’t produce, as a collective, up to 150,000 Barrels per day, or 7% of
the national daily production, so why are we fighting ourselves?
And I am less keen on how much you’re getting as rent from the asset
you are holding, than the capacity you are building as manager of a
Nigerian oil company who is awarded the asset, in trust for the rest of
us.
I am for an ongoing, earnest debate on the National Question. But
false information misleads all of us into false conclusions, which
reduce the complexity of the solutions we ought to be proffering.
The author cites a number of hydrocarbon acreages belonging to
Northern elites, but ignores the fact that holding an acreage is one
thing; getting value out of it is another.
That so many people believe the poorly researched article, and so
instantly forward it that it becomes one of the most travelled essays on
the National Question, is testimony to poor knowledge of how the oil
industry works.
The first field the author mentions is Obe field, which, he rightly
claims, is held by Cavendish Petroleum, a company set up by Alhaji Mai
Deribe. Alabo- George lied by saying that the Obe field, the main
hydrocarbon pool in OML 110, contains 500Million barrels of oil
reserves.
The Obe field does not have a proven 20 Million barrels. I am not
sure it has 10Million barrels. It is not producing as I write. The Obe
field has not produced for five years, since 2007, when Tranfigura, the
last technical partner engaged by Cavendish, walked out.
I don’t know what discipline Mr Alabo-George belongs to, but this
point I am about to make is well known to every junior petroleum
geologist with three year experience in the crummiest E&P company:
If a field holds 500Million barrels of oil, proven, in shallow water
Nigeria, it won’t lie fallow. Investors would rush it.
In countries where you don’t have the complications that the NNPC
brings to the table here, fields that haven’t proven much more than
500Million barrels are “rushed” through to development.
Ghana’s Jubilee field didn’t prove a billion barrels before the
country’s authorities approved a field development plan. Apart from
Nigeria, Angola, Libya, Algeria, Ghana (now, since 2008) and perhaps
Equatorial Guinea, no African country has a billion barrels in proven
reserves. 500 Million barrels is half of that.
Mr Alabo-George says that Obe has the capacity to produce about
120,000 barrels of crude oil daily from its OBE 4 and OBE 5 wells. What
sort of numeracy is this? Or is he dreaming these figures? How can a
field with less than twenty million barrels “have the capacity” to
produce 120,000 barrels per day?. What’s capacity?
Alabo George’s second example of a wealthy northerner swimming in oil
money is Mohammed Indimi, “a Fulani and close friend of General Ibrahim
Babangida”. He says “Oriental Energy Resources Limited runs three oil
blocks: OML 115, the Okwok field and the Ebok field. OML 115 and Okwok
are OML PSC, while Ebok is an OML JV. All of them good yielding offshore
oil blocks”.
The author just doesn’t care to verify his claims. True, Indimi’s
Oriental Resources holds the three assets. OML 115 is not producing as I
write. No one has certified that there’s a producible field in the
acreage. Ebok is being produced, on Oriental Resources’ behalf, by
Afren, a UK listed company. Last year, the field delivered an average of
8,000Barrels of Oil per Day(BOPD), according to Afren’s website. You
can google it. Okwok, as I write, is still in development. Translation:
it has produced nary a drop of oil.
Aminu Dantata’s Express Petroleum holds the Oil Mining Lease 108,
with technical partners Shebah Petroleum, which bought out Conoco, the
original technical partners. Fine.
The Ukpokiti field, the main asset on the acreage, produced for quite
a while; and should have made the Dantatas quite rich, over a period of
more than seven years. The field died out at some point and is being
revived as I write.
“NorthEast Petroleum is owned by another Fulani businessman from the
North East, Alhaji Saleh Mohammed Jambo”, Alabo-George testifies. “The
license was awarded to him by General Ibrahim Badamosi Babangida”.
Another truth: North East Petroleum has NEVER produced a single drop
of oil since that award in the early 90s. There, simply, hasn’t been a
discovery worth the while for operator TOTAL.
I agree that Theophilus Danjuma, also a Northerner, is entitled to
contest for the award of the man who made the most fortune, at a
sitting, on an oil acreage in Nigeria.
Alabo-George’s article, in his rush to conclusions, even understates
the significance, by claiming that Danjuma’s company, South Atlantic
Petroleum Limited(SAPETRO), made $1Billion from the deal.
The truth is that China National Overseas Offshore Company(CNOOC ),
signed a definitive agreement with SAPETRO to acquire a 45% working
interest in OML 130 for $2.268 billion cash.
I don’t know how much the broker of the deal took, but I am yet to
confirm if the Nigerian government earned any withholding tax from that
transaction. In spite of what he has earned “upfront”, Danjuma’s SAPETRO
gets 25,600Barrels of Oil per day for its 15% of OML 130 from the Akpo
field, which is delivering 175,000BOPD.
But if you complain about Northerner Danjuma, what about the
Alakijas, a Yoruba couple whose company, Famfa Oil, is “entitled”, every
day, to 25,000BOPD from Chevron operated Agbami Field, located in
deepwater OML 127?.
These two companies are two of the four largest producing Nigerian
companies today. The other two are Adenuga’s Conoil(25,000BOPD) and
Seplat Petroleum(37,000BOPD, operated, 16,000BOPD, equity).
Only one of those four companies is Northern owned. And it is
outright falsehood that “ 80 per cent of crude oil and gas produced by
indigenous companies is controlled by the North-East”.
But, as I said again: which technical and managerial capacity are we
building on the back of the rent collected from these leases. It’s the
real job.
The last example I’d touch, before the concluding commentary, for
space purposes, is the case of Rilwan Lukman, who Alabo-Gorge cites as
having controlling shares in Afren, the UK listed company. Lukman was
there on the ground floor of the construction of Afren, around 2004, no
doubt, but the key founders of Afren are Ethelbert Cooper, the Liberian
businessman and Osman Shahenshah, who is the current Chief Executive.
What people like Lukman and Egbert Imomoh, the other Nigerian on the
company’s board in the founding days, did, is the kind of thing I urge
Nigerians in their positions to do.
Use your knowledge to access and create value, not to grab and
destroy value. Cooper and Shanenshah knew that Lukman(then out of office
both from OPEC and as Nigerian special adviser), and Imomoh(then
recently retired as Deputy Managing Director Of Shell Nigeria) knew the
Nigerian oil industry deeply and could access oil and gas fields that
were lying fallow.
Shanenshah, coming from a financial services background, knew how to
raise funds: the most important thing in oilfield exploration and
development. Indeed the first piece of news by which most people knew of
the existence of Afren was that the IMF had agreed to give a 5Million
dollar loan to this company, which was only just about starting. It pays
to have Lukman on your board.
Yet, in spite of Lukman’s influence in the Nigerian polity, Afren had
never accessed Nigerian acreages via government awards. Afren, cash in
hand, running a technically proficient company, approaches Nigerian
indigenous owners of assets-like Ndimi’s Oriental Resources, Amni and
several marginal field holders, and signs agreements with them to be
technical partners.
After Afren has recovered its investment via cost oil, Afren and the
company continue to share the proceeds from the field 50:50 for the life
of the field. Afren uses Nigerian technical capacity to a large degree
and it trains a lot of people. But it can do more.
Afren has never benefitted from bid round or government-sanctioned
discretionary awards, so why would anyone link Lukman’s involvement in
Afren in a list that has a number of Northerners supposedly benefitting
from government largesse? That is part of the trouble I have with
Alabo-George’s essay.
I wouldn’t compare Lukman’s relationship with Afren to the benefits
that Atiku Abubakar derives from being a part owner of Intels, the
logistics company which takes advantage of the free trade zone in Onne,
near Port Harcourt.
This particular example helps us to locate “the Nigerian tendency”,
beyond “the Northern tendency”, in this discussion. Because, really, we
are just all the same.
A foreign company comes to Nigeria to set up for business. Because of
the difficulties we invent as barriers to entry, this company requires
the services of some big Nigerian men, preferably those who have worked
for government, for access.
What Atiku Abubakar has done with Intels has parallels in other
sectors of the economy and is comparable with what Yoruba chieftains,
Ijaw leaders, Igbo High Chiefs, Idoma overlords, etc, etc, have done
with many other companies operating here.
That’s how people became key shareholders of companies like Julius
Berger. As I write, the key sentiment underlining the complaints against
the tolling on the Lekki Expressway is that “most of the money will go
to Tinubu’s pocket”. That’s the word on the street.
Brokerage is not a bad thing on its own, but what we need to stress
is a level playing field, rule of law, security of tenor and equity and
fairness as much as possible, for all.
If I really want to be mischievous, I’d focus on the recent deal in
which Shell and Agip have had to pay in excess of one billion dollars to
Dan Etete, a south-south man, for stakes in Oil Prospecting Lease OPL
245. And I would ask “Is that necessarily right”? Should the president, a
south-south Ijaw man, have waded in to ask Shell and Agip to move the
deal forward? But that’s a story for another day.
In my book, people from everywhere have taken advantage of the
unstructured way we have dispensed with oil and gas acreages. Naming
names about which Northerner got what size of the pie is less useful
than a focus on how government is insisting on open and transparent
bidding, but more importantly, on Nigerian technical know how and
management.
You can’t hand over an acreage and walk away. You have to monitor
what the holder is doing. How he is ensuring employment. If we can’t,
with all the treasure, build five private E&P companies that have
the internal competencies that Shell has and can go out and buy and
operate assets the way that UBA and GTB and Ecobank venture into Ghana
and The Gambia, then we have wasted all of the 56 years we have spent
since the hoorah at Oloibiri.
Akinosho, a petroleum geologist, former news reporter, and
one-time community newspaper editor, is now publisher of the
well-regarded African Oil+Gas Report
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